According to the Bank Recovery and Resolution Directive (BRRD), competent and resolution authorities have discretion in granting simplified obligations to institutions if they meet certain eligibility criteria. In line with the proportionality principle, these simplified obligations may result, among others, in reduced content and details of recovery and resolution plans, as well as lower frequency in the update of such plans.
Simplified obligations may be applied by competent and resolution authorities based on their assessment conducted on the basis of the criteria laid down in the BRRD, which include the size of the institution, interconnectedness, scope and complexity of its activities, risk profile, legal status, nature of business and shareholding structure.
Competent and resolution authorities should carry out the eligibility assessment in two stages. Firstly, institutions should be assessed against the quantitative criteria, based on a set of quantitative indicators. Secondly, institutions which pass the quantitative stage should be subject to a qualitative assessment. In principle, only institutions that pass both stages of the assessment can benefit from simplified obligations. However, competent and resolution authorities may conclude that very small credit institutions meet the quantitative assessment solely on the basis of their assets size. Moreover, the draft RTS introduce two types of exemptions for promotional banks and credit institutions subject to an orderly winding-up process.
Comments to this consultation can be sent to the EBA by 8 August 2017. A public hearing will take place at the EBA premises on 21 June 2017 from 11.00 to 13.00 UK time.
Press release
Consultation paper
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